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Trademark Hijacker Sentenced Liable for Civil Compensation

In Sink Erator is a world-famous food waste disposer brand. EMERSON ELECTRIC CO. has applied for the English trademark "Sink Erator" and the Chinese trademark "爱适易" in China in 1994 and 1998, respectively, and applied for registration of the trademark in 2006. The above trademarks are approved for registration on commodities such as Class 7 "Food Waste Disposer" and Class 11 "Water Purification Device" (hereinafter referred to as "Sink Erator Series Trademarks). 

Xiamen Angel Drinking Water Equipment Co., Ltd. (Current name: Xiamen Hemeiquan Drinking Water Equipment Co., Ltd.) and Xiamen Haina Baichuan Network Technology Co., Ltd. (hereinafter referred to as "Xiamen Haina Baichuan Company") (Wang Yiping is the legal representatives of both enterprises) had applied for registration of trademarks identical to Emerson's registered trademarks in several categories of goods and services associated with Emerson's "Sink Erator" series of products since December 2010. Emerson Company had to block Xiamen Angel Company's trademark hijack through objection, review of objection and administrative litigation against ruling of review of objection. 

Before the prosecution of the case, Xiamen Angel Company and Xiamen Haina Baichuan Company applied for registration of 48 trademarks identical to or similar to "Sink Erator" series trademarks in 14 categories of goods and services, of which 47 trademarks were represented by Xiamen Xingjun Intellectual Property Affairs Co., Ltd. ("Xiamen Xingjun Company"). 

In March 2020, Emerson brought Xiamen Angel Company, Xiamen Haina Baichuan Company, Wang Shiping and Xiamen Xingjun Company to Xiamen Intermediate People's Court, requesting the court to order the defendant to stop the trademark hijack, compensate for losses and eliminate the impact. 

Xiamen Intermediate People's Court made a first-instance judgment on April 22, 2021, and found that the defendants’ mass hijack violated Article 2 of the Anti-Unfair Competition Law and constituted unfair competition. Xiamen Angel Company, Xiamen Haina Baichuan Company and Wang Yiping constitute joint infringement, while Xiamen Xingjun Company constitutes assisting infringement. The court ordered the four defendants to stop applying for registration of trademarks identical to or similar to the "Sink Erator" series trademarks, compensate Emerson for the loss of attorney fees caused by stopping the hijack and reasonable expenses of the case of 1.6 million yuan, and issue a statement in the nationwide media to eliminate the impact. 

Fujian Higher Court made a second-instance judgment on September 27, 2021, rejecting the appeal and upholding the original judgment. 

The court of first instance made clear the actionable nature of such disputes, that is, the loss of lawyers' fees caused by the implementation of trademark hijack belongs to the litigation caused by property relations caused by hijack, which requires civil liability and belongs to the acceptance scope of civil litigation. At the same time, the court further clarified that the trial of these civil disputes does not conflict with the administrative organ's exercise of trademark examination authority according to law. 

The court also held that the "Sink Erator" series trademarks had a certain influence in the field of food waste disposers and water purification equipment as early as 2005. Xiamen Angel Company and Xiamen Haina Baichuan Company applied for registration of the same or similar trademarks on many categories of goods and services, but could not reasonably explain the registration intention and design source, which obviously exceeded the needs of production and operation. Meanwhile, the court further held that Xiamen Angel Company forced Emerson Company to file objection, invalidation, administrative litigation and civil litigation to safeguard its legitimate rights and interests, which interfered with the normal production and operation of Emerson Company to a certain extent. 

The court further considered the fact that Xiamen Angel Company, Xiamen Haina Baichuan Company and Wang Yiping, the legal representative and actual controller of the two companies, applied for registration of more than 100 trademarks that are identical or similar to trademarks with certain popularity of other enterprises. 

Based on the above facts, the court of first instance found that the hijack of "Sink Erator" series trademarks by the two defendants violated the principle of good faith, destroyed the fair market competition order, damaged the legitimate rights and interests of the plaintiff, violated the provisions of Article 2 of the Anti-Unfair Competition Law, and constituted unfair competition. 

This is the first ruling in China against hijacker who did not actually use the hijacked trademark to commit trademark infringement or malicious exercise (such as using the hijacked trademark to make administrative complaints, platform complaints, etc.). Based on the defendants’ continuous and batch hijack of the plaintiff's well-known trademarks, it is determined that it violates Article 2 of the Anti-Unfair Competition Law and constitutes unfair competition. Although the defendants in this case did not maliciously exercise the right to register trademarks and interfere with the plaintiff's business activities, the court can find that such hijack constitutes unfair competition, which undoubtedly provides a new way to solve the problem for the obligee who has to pay a lot of fees to deal with the hijack and hoarding of trademarks.